Michigan is first state in 58 years to repeal right-to-work law

By Larry StewartApril 12, 2023

(Photo: Reuters Connect)

On March 24, Michigan became the first state in 58 years to repeal its right-to-work statute, securing unions’ place in state employment and possibly ushering in wages most notably higher for construction labor.

Traditionally a mainstay of organized labor, Michigan enacted a RTW statute in 2012 that prevented employees from being forced to join or financially support a labor union as a condition of employment.

Repeal will take effect on March 30, 2024.

What right-to-work is

Labor andemployment law firm Littler Mendelson P.C. explainsthat unions in non-RTW states typically negotiate into collective bargaining agreements provisions known as union security clauses, which require employees to join or financially support a union as a condition of employment.

The National Labor Relations Act protects the right of states to negate union security clauses by enacting RTW statutes. Not counting Michigan, 26 U.S. states have such statutes. Although RTW statutes vary from state to state, they generally prohibit unions from enforcing union security clauses. This allows employees in RTW states to decline or resign from union membership and avoid paying union dues. Therefore, RTW statutes protect workers’ choices and challenge unions to offer services on top of the collective-bargaining benefits that all employees will get regardless of union support to convince employees to pay union dues.

Under the National Labor Relations Act of 1935, all workers covered by collective-bargaining agreements receive the full benefits of those agreements, such as wages and grievance redress, whether they are union members or not. Unions are legally prohibited from discriminating against employees in RTW states who decide not to join the union and pay dues. This means workers who are not supporting a union that facilitates a collective-bargaining agreements labor unions get the benefits of that bargaining.

Unions oppose RTW because of its provisions’ devastating effect on the revenue that supports their primary mission, effective collective bargaining.

What happened in Michigan

Michigan’s 2012 RTW statute currently prohibits an individual from being required to do any of the following to obtain or continue employment:

  • Refrain from or resign from membership in, affiliation with, or financial support of a labor organization
  • 变得健康或保持劳工组织的成员
  • Pay any dues, fees, or other charges to a labor organization
  • Pay a charitable organization or another third party an amount of money equivalent to dues, fees, or other charges that are required to be represented by a labor organization.

Michigan’s Senate Bill No. 34 (“SB 34”) eliminates the state’s RTW legislation entirely. Under SB 34, employees in unionized workplaces will no longer have a statutory right to opt out of union membership or refrain from paying union dues or fees as a condition of employment. SB 34, therefore, legalizes union security clauses in collective bargaining agreements that force employees to pay dues, fees, assessments, or expenses that support labor unions and that permit unions to force employers to discharge employees who refuse to do so through the application of union security clauses. It also removes the financial penalty for using force, intimidation, or threats to compel employees to join or not join a union, affiliate with or financially support a union, and/or pay a charitable organization or another third party an amount of money equivalent to dues, fees, or other charges that are required to be represented by a labor union.

Michigan’s legislature also took measures to prevent the enactment of other RTW protections in the state going forward. For instance, SB 34 restricts municipalities from enacting RTW ordinances, by expressly stating that no local governmental law or policy can prohibit or limit any agreement requiring employees to pay dues or service fees to a labor organization as a condition of employment.

SB 34 also includes a $1 million financial appropriation measure to the Michigan Department of Labor and Economic Opportunity. This appropriations measure in SB 34 is likely to make the bill “referendum proof.” While Article 2, Section 9 of the State Constitution allows voters to approve or reject laws enacted by the legislature through referenda, that right does not extend to appropriations. The appropriations attached to SB 34, block Michigan voters from repealing SB 34 through the referendum process. This leaves a constitutional amendment, a court decision, or another legislative bill as the remaining vehicles to overturn the law. Notably, Governor Gretchen Whitmer signed SB 34 into law despite vowing in January 2019 to “veto legislation that circumvents the right to a referendum.”

The Impact of SB 34

Unions in Michigan are expected to take advantage of the change in law. Littler Mendelson’s lawyers say employers that bargained union security clauses out of their contracts following the passage of Michigan’s RTW statute in 2012 can expect unions to attempt to reinstate them when the collective bargaining agreement reopens. Employers that bargained language merely suspending union security clauses while the RTW statute was in effect can expect unions to seek to revive them mid-term. The right of employers in the latter situation to insist upon bargaining about the effects of such a change is unclear.

Employees will have questions about how the repeal will affect them and employers should be prepared to answer these lawfully. For instance, employees may not be familiar with union security clauses and/or how to become a Beck objector under Communications Workers of America v. Beck, 487 U.S. 735 (1988), which allows employees subject to union security provisions to become nonmembers and only pay the portion of union dues necessary to the union’s performance of its representational duties.

Michigan employers should be prepared to address union attempts to revive or establish union security provisions, including identifying the scope and limits of the employer’s bargaining obligations. As significant as SB 34 will be to the terms and conditions of employment in Michigan, and to the coffers of labor unions with members in that state, it is unlikely to spark a nationwide shift in the remaining RTW states. To do that, unions would need changes in federal law, such as those sought by organized labor in the 2023 PRO Act.

Second-term Democrat Gov. Whitmer also signed legislation restoring a prevailing wage law that had been repealed by Republicans in 2018. It requires contractors hired for state projects to pay union-level wages.

Right-to-work’s effect on Michigan

Associated Press coverage of the state’s new labor lawsnoted that Michigan had the nation’s seventh-highest percentage of unionized workers when the then-Republican-controlled Statehouse pushed the RTW legislation through without hearings in 2012. Michigan labor unionization dropped to 11th in 2022. Over the past decade, union membership in Michigan dropped by 2.6 percentage points as overall U.S. union membership has fallen steadily for decades to an all-time low last year of 10.1%.

Michigan becomes the first state in 58 years to repeal a RTW law, with Indiana repealing its in 1965 before Republicans there restored it in 2012. In 2017, Missouri’s Republican Legislature approved a RTW law, but it was blocked from going into effect before voter’s overwhelmingly rejected it the next year.

Michigan’s experience with RTW is hardly conclusive.

“It’s really hard to tease out any measurable effect either on unions or on businesses of having it,” Paul Isely, associate dean of Grand Valley State University’s Seidman College of Business,told NBC Grand Rapids, Mich., affiliate, WoodTV News 8that union membership moved up and down with total state employment during the rein of RTW. He said it didn’t impact economic development, either.

“Right after RTW was put into place in 2013, we saw stories of companies that were willing to look at Michigan that hadn’t been willing to look at Michigan before. But if we pull ourselves out and look at the number of jobs created, or the number of new businesses created in Michigan, we don’t see any measurable change before or after the law.”

Tim Bartik, economist with the W.E. Upjohn Institute for Employment Research in Kalamazoo, told News 8 that a recent study showed state wages eroded by about 1%. He added that it’s hard to study RTW’s impact because other economic changes are happening at the same time.

Federal findings on RTW impacts
(Photo: National Bureau of Economic Research)

Thoroughresearch published June 2022 by the National Bureau of Economic Researchon the impacts of RTW first used data from five states between 2011 and 2017 — Indiana, Michigan, Wisconsin, West Virginia, and Kentucky. Worker-level data from the U.S. Census Bureau’s Current Population Survey was used to test for differential trends in a state’s wage and unionization rates in the years after it adopted a RTW law, relative to states that had never done so.

Researchers found RTW laws are associated with a drop of about four percentage points in unionization rates five years after adoption, as well as a wage drop of about 1%. These impacts are almost entirely driven by three industries with high baseline unionization rates — construction, education, and public administration — where RTW laws reduce unionization by almost 13 percentage points and wages by more than 4%, again over five years. The impact of RTW laws on wages and unionization rates is also larger for women and public-sector workers, two groups that are overrepresented in highly unionized industries.

The researchers complement these results with a second approach based on the differential effects of RTW laws on the highly unionized industries. This strategy rests on the assumption that without RTW laws all states would have the same relative distribution of unionization rates and wage levels across industries. They estimate the impacts of these laws by testing whether RTW states have especially low unionization rates and wages in highly unionized industries. They find a difference of nearly 20% in the unionization rate between states with and without RTW laws. RTW laws are also associated with 7.5 percent lower wages.

最后,研究人员使用这两个经验al strategies to examine a key labor-market question: how does unionization affect workers’ wages? If RTW laws only affect wages by lowering unionization rates, the causal effects of unions on wages can be estimated by dividing the effects of RTW laws on wages by their effects on unionization. Under this assumption, unionization appears to raise wages by approximately 40%.

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